IndoStar Capital to buy IIFL's CV finance biz with AUM worth Rs 3,949 cr

IndoStar Capital Finance Limited (IndoStar) will buy out the commercial vehicle (CV) finance business of India Infoline Finance Limited (IIFL Finance) with assets under management (AUM) worth Rs 3,949 crore.

IndoStar has signed an agreement to acquire the CV finance business of IIFL Finance, a material subsidiary of IIFL Holdings Limited. The boards of both companies have approved the transaction, however, the value of the deal has not been disclosed. 

In a joint statement, both companies said the acquisition includes the entire CV finance AUM of Rs 3,949 crore as on December 31, 2018. It comprises of Rs 2,450 crore of loan portfolio and Rs 1,499 crore of securitisation and assignment portfolio.  The 1,337-employee team located in 161 branches of IIFL Finance spread over 18 states will also move to IndoStar.

This team has achieved a gross disbursement in excess of Rs 3,000 crore for FY18 and Rs 1,723 crore for H1FY19. IIFL’s investment banking team was the exclusive advisor to the transaction.

R Sridhar, executive vice-chairman & CEO, IndoStar Capital said, “This strategic acquisition, which is profit accretive from day one, helps IndoStar in achieving the goal of becoming the leading retail finance NBFC.”

IndoStar Capital, promoted by Everstone Group in 2011, initially started as a corporate lending business. Since 2015, IndoStar has been building its retail lending business, which accelerated last year with the set-up of CV finance and affordable housing finance businesses.  

IIFL intends to exit the CV business and focus on its core focus areas of home loans, SME, gold and micro-finance loans. IIFL Finance is a diversified NBFC providing small-ticket loan products to its customers, including mortgages, loans against property, construction finance, gold loans, SME loans, capital market and micro-finance loans. It had an AUM of Rs 36,400 crore as on December 31, 2018 and CV loans constituted 11 per cent of the AUM.